In estate planning, revocable trusts are an essential legal tool and arrangement. The purpose of a revocable trust is to manage assets during someone’s lifetime (if necessary due to incapacity) and distribute assets after they pass away. Another important term associated with a revocable trust is the Settlor, the person who funds the trust with assets and names the trust’s beneficiaries.
What is a revocable trust?
This legal tool helps avoid probate and can be a much more private estate planning option than a will.
Characteristics of revocable trusts
The following features of a revocable trust are reasons people may utilize them as part of their estate plan:
- Revocable trusts allow the Settlor to maintain control of the assets while they are alive.
- The Settlor can make changes to the trust if they are mentally competent.
- Revocable trusts do not protect the assets inside it from creditors if the Settlor owes money.
- Assets titled in the revocable trust avoid probate, the legal process that transfers property after a person dies.
- Revocable trusts are easy to create and change. As long as the Settlor is mentally competent, changes can be made.
- A revocable trust can also take care of the Settlor if they become unable to care for themselves, avoiding the process of the court having to order guardianship.
Whether used to supplement or replace a will, a revocable trust is an essential estate planning tool that helps people accomplish their estate planning goals.